Asian rubber futures settled lower Tuesday due to speculative selling and profit taking amid a 20% rise in Japan's natural rubber inventories in the first 10 days of December, said trade participants.
Some rubber factories in Thailand tried to offer RSS3 rubber at $2,900 a metric ton, FOB for shipment in the first quarter of 2010, but buyers were cautious and actual sales were at prices around $2,820-$2,850/ton. Prices of various grades have converged and Indonesia's SIR20 usually sells at a large discount to Thai RSS3 grade, but both are now selling almost at par with each other.
On the Singapore Commodity Exchange, the TSR20 contract, which is benchmarked against SIR20, even traded at a premium to the RSS3 contract.
However, prices of USS3 raw material in the three central markets of Thailand were steady above THB85 a kilogram as daily availability declined again.
The May RSS3 contract on the Tokyo Commodity Exchange settled Y2.5 lower at Y267.7/kg. The new benchmark June contract, which started today, settled at Y269.8.
Prices eased again during the night session and the June contract ended at Y268/kg. Night session prices aren't included in intraday trading.
"Investors are taking profits ahead of tomorrow's holiday, but physical demand may push up prices again in the next few days," said a broker in Tokyo.
He said prices are likely to move in the Y260-Y275 range for the rest of 2009. Markets in Japan are closed tomorrow for a public holiday.
Due to the strong demand in China, prices are likely to consolidate above Y270/kg in the near term, said an exporter in Singapore.
He said the latest correction was due, as the market was technically overbought this month.
China's natural rubber imports recovered after a recent slump and were up 19% on month in November at 120,641 tons, according to government data. Imports fell 37% on month in October.
Traders said demand for automobiles is pushing up sales of tires and rubber. November passenger vehicle sales in China almost doubled on year to a record 1.04 million units.
However, higher inventories of rubber are still weighing on prices. Natural rubber stocks in warehouses recognized by the Shanghai Futures Exchange are above 131,000 tons compared with 41,393 tons June 25.
The benchmark March contract on the Shanghai Futures Exchange settled 0.5% lower at CNY23,090/ton.
Natural rubber stocks in Japan as of Dec. 10 stood at 5,673 metric tons, up 20% from 4,705 tons Nov. 30, according to industry data.
Tight supply in Thailand and Indonesia, the world's top producing and exporting countries, along with strong demand from tire makers in Japan, may have prompted buyers to aggressively replenish stocks to avoid scarcity over the next few months, traders said.
Until late October, factories were using up existing inventories, which were cheaper than new purchases, as prices are hovering around 15-month highs.
The benchmark July RSS3 contract on Agricultural Futures Exchange of Thailand settled THB1.35 lower at THB94.15/kg.
Asian physical prices were lower in sluggish trade.
RSS3 grade rubber traded at $2,820/ton and $2,830/ton, FOB, for February/March shipment, said a Singapore-based executive at a rubber trading company, adding that SIR20 traded at $2,820/ton for February shipment.
(Source: irco.biz)
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